The Geithner Plan

I’m pouring over the various opinions of the Geithner toxic asset plans, as well as the plans themselves, to report back some sort of summary. There’s a lot to take in and even folks who normally agree don’t seem to be on the same page with this one.

But off the top of my head, it seems to me that the plan involves some serious risk, but not as much as a full-on takeover of the banks at a level that might be required if we adopted Paul Krugman’s “Swedish option.” I’m hardly in a position to correct a Nobel Laureate, but even the smartest people can be wrong.

Because he says that this same plan was floated and then discarded during the S&L scandal in the Eighties. Fair enough. But in the Eighties, I remember the word “trillion” as only used by the annoyingly smart kids, as in, “well, I betcha don’t know what comes after a billion!”

And I didn’t, because who had ever heard that number being used?

Now, the plan we’re working off of right now is expected to cost about a trillion dollars by itself. How much more would it cost to own these banks and their failed assets? Seems to me like the scale of the problem required some additional help from outside government.

By Tommy Belknap

Owner, developer, editor of DragonFlyEye.Net, Tom Belknap is also a freelance journalist for The 585 lifestyle magazine. He lives in the Rochester area with his wife and son.